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Bitcoin and Chill

Bitcoin’ price movement in retrospective and what will be the flagship currency’ future path.

So far 2018 was a big bear year on Bitcoin and crypto in general. The prime cryptocurrency lost more than 80% of its value since its peak at 20k from the beginning of the year. We’ve witnessed a couple of bullish movements like the April move from the lows and the June/July upward moves. Yet all of them have been reaching lower highs, lacked the necessary volume and was emphasized by big FOMO on the market. In addition, few were the ones who actually predicted these moves, especially with the mixed TA signs, which were showing more bearish movements, especially in April. All in all, these moves were basically Bart charts, which hurted a lot of traders on the market.

FOMO

For us, the main reason behind these sudden and hard to predict moves was the FOMO within the market. The FOMO is not just a problem in Crypto, it is a problem in every market AND on each time frame. In hyped markets, it’s obviously much extremer, like most of you have learned the hard way in 2018. Reading all those predictions of famous crypto preachers, saying Bitcoin’ is going to 50K or 250K is creating a very unstable market environment. What kind of an idiot would you have been for NOT buying bitcoin’ at 8K or at 10K if you “know” the price is going above the 100K. It is VERY difficult to ignore all of these influences. A simple example where Goldman Sachs predicts the stock markets to go much higher 2 months ago and Tech stocks like Amazon and AMD’ were being pushed higher (like alts coins in crypto) creating FOMO even in the stock market. Well, we all have seen what happened in the past weeks in the stock market, record dumping even. So it’s up to the trader to do his own research and keeping an objective thinking and making logical conclusions is the best strategy for doing so.

So where is Bitcoin heading?

Despite the bear year so far, we think in the past 3 months the market is slowly trying to change its direction. For us, there are several main factors contributing to our conclusion. First and maybe most important is that the 6000 support is getting stronger and slowly moving upward. The lows we’ve witnessed the past 3 months were always higher than the previous ones. In addition, alts made a panic low 2 months ago followed by high volume, a sign that allots of accumulation was going on. Smart money will never buy-in if they are not completely sure that we are near the bottom. Finally, the sentiment on TV and the main news outlets showed more bears than bulls. For us, if you are hearing on the TV, that Bitcoin will cross above 5k, you should be certain that it won’t be going to happen… Basically the same as when after the 20k top figures of Bitcoin, every “expert” and “longtime trader” was saying it will go to around 50k.

We think, the bottom is near or maybe we’ve already touched it. Yet, we can’t be 100% sure in future bullish movement and that’s purely because of the low volume in the cryptomarket. For the past few months, exchange volumes were decreasing every day. It was already bad a month ago but it’s just getting worse every week. In general, this means there is a lack of interest in this market, at the current price. The other problem we’ve seen, which is a very confusing thing in Crypto is the short covering part. This has been a (too) big factor in crypto. We give it a small chance this time that for example Bitcoin’ would have a short squeeze to above 7000 when all of a sudden a lot of volume enters the market again to start a new rally. Actually like we did in April. This has been working both ways though, meaning there have also been LONG squeezing. At the moment the longs are at a low level on Bitfinex and the open shorts are higher, so if they pull a trick with this it will probably be a short squeeze. But don’t expect much from Bitfinex though because volume there has dropped extremely!

When things were not difficult enough already, the past month Tether has been throwing it’s weight into the market as well. Creating even more uncertainty into this market. From the looks of it, we can hopefully see this coming to an end soon because it keeps getting closer towards the $1.00 level again.

Another factor to consider

Much more important and significant at the moment, is the OI (open interest) on Bitmex, even though the volume has dropped like 80/90% there as well, the OI has reached the highest level in quite some time now. So a big move will probably just be a matter of time. OI is at 840 mills now and usually, it drops to a level around 600 mils, so this will probably be 250 million Dollars of fuel that will get pushed into the market in usually a few minutes. With the daily volume on Bitmex being even below 500 mils nowadays (where it used to have an average of 4.000 mills) it will trigger a big move. Bitmex price has been moving above the market price (average price of Bitstamp, Coinbase, and Kraken) showing there are bulls willing to buy here.Now the question is, is this smart money accumulating here or are these bulls the ones getting fooled?

Bitcoin and Chill

So all in all, eventhough the market is showing some positive signals that it is close to finally break the bearish trend, it is still an uncertainty. To be as objective as possible, currently TA is very difficult and unreliable, because with this low volumes, manipulation is even easier than it used to be. The only “safe” play we can see for now is to stay out of this market until we see a break of 6500 or 6000. Until than, if you don’t have a crystall ball it is purely speculation and gambling on where the market will go. So just sit comfy and chill, until we have a clear path.